Monday, June 11. 2012

Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.

Here's a question: if Ireland wants to renegotiate its bailout deal, what about previously bailed out EU partners like Greece and Portugal -- do they get to renegotiate their deals?

Are the troubled EU partners just playing Germany now for the best deal they can get, avoiding the tough choices for themselves? Socialism almost always seems to boil down to other people's money, doesn't it?

For Germany, being part of the European Union has always included an element of blackmail. France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They're banking on Berlin losing its nerve.

France's newly elected Socialist government has just decided to lower the retirement age to 60. From now on, no Frenchman will be forced to work any longer just because it might help kick-start the country's flagging economy. And there's no way the French are going to work as long as their poor fellow Europeans in Germany, whose government is obliging them to labor and toil until age 67.

Blessed France, where the ruthless laws of the economy lose their ability to frighten people bathing in the eternal sunlight of socialism. Granted, this grand nation doesn't produce enough children to guarantee the prosperity of its inhabitants into old age. But in France, something that would elsewhere be viewed as a serious demographic problem demanding tough attention is seen as a mere misunderstanding that the strong arm of the president can simply dispel with the stoke of a pen, should he so desire....

We've now reached a phase in the euro crisis when everyone is trying to feather their own nest at someone else's expense. Hollande is campaigning to have the European Union help the Spanish rehabilitate their banks without involving itself in their business dealings. But, in doing so, he's much less focused on Spain's well-being than on France's. Once the principle stating that countries can only receive financial assistance in return for allowing external oversight has been contravened, one is left with nothing more than a pretty piece of paper to insure against the vicissitudes of economic life.
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French foreign policy has always been plagued by an obsessive fear of German hegemony over Europe -- and the euro was supposed to be the way to prevent it. It's well-known that French President Fran?ois Mitterrand made his approval of German reunification contingent on German Chancellor Helmut Kohl's acceptance of the common currency.
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The next stage in the crisis will be blatant blackmail. With their refusal to accept money from the bailout fund to recapitalize their banks, the Spanish are not far from causing the entire system to explode. They clearly figure that the Germans will lose their nerve and agree to rehabilitate their banks for them without demanding any guarantee in return that things will take a lasting turn for the better.

How soon we will see this political dynamic in the US, with financially-troubled states like Illinois and California seemingly almost destined to ask for federal bailouts?